The correct answer is C: 'Replace with two NAT gateways in different Availability Zones.' This solution ensures high availability and fault tolerance, as deploying NAT gateways in multiple Availability Zones helps to distribute the traffic and prevent a single point of failure. Unlike NAT instances, NAT gateways are managed by AWS, providing better scalability and resilience. Options A and D do not offer the required high availability and fault tolerance as they rely on a single Availability Zone. Option B adds complexity without leveraging the built-in scalability and high availability features of NAT gateways.